Zoom struggling in post-pandemic world as interim profit dips

(Alliance News) - Video conferencing platform Zoom Video Communications Inc on Monday reported a sharp drop in third-quarter profit, due to soaring costs.

"During the pandemic, Zoom was a stand-out winner, benefitting from the stay-at-home trend, which meant many businesses were completely reliant on Zoom for communications during lockdowns. However, post-pandemic, investors have struggled to see where the growth for the business could come from," said Victoria Scholar at interactive investor.

In the three months that ended October 31, Zoom reported net income of USD48.4 million, down significantly from USD340.4 million the previous year.

Basic earnings per share plummeted to USD0.16 from USD1.14, while diluted earnings per share dropped to USD0.16 from USD1.11.

The strength of the US dollar negatively impacted the business, with the firm taking a hit when its international earnings were translated back into dollars. This, ii's Victoria Scholar added, was "a theme we have seen come up for many US businesses with an international focus this year."

Zoom's operating expenses surged to USD764.7 million from USD488.9 million, and other net expenses jumped to USD4.9 million from USD3.0 million the year prior.

Nonetheless, the firm reported that revenue ticked up to USD1.10 billion from USD1.05 billion year-on-year.

Chief Executive Eric Yuan added that this figure came above previous guidance, thanks to "continued momentum" in its Enterprise segment which saw customers grow by 14% against the same quarter the previous year.

Despite the third quarter revenue growth, Zoom said its revenue for the full-year is now expected between USD4.370 and USD4.380 billion. In the year ended January 31, 2022, the company reported revenue totalling USD4.099 billion.

Non-GAAP income from operations, however, is expected between USD1.490 billion and USD1.500 billion. In its last financial year, Zoom reported non-GAAP income from operations totalling USD1.657 billion. This means that Zoom expects non-GAAP income, at best, to drop by 9.5% year-on-year.

The disappointing annual earnings outlook sent Zoom shares 4.2% lower at USD76.89 on Tuesday in New York. In the year-to-date, the stock was down by just under 59%.

By Heather Rydings; [email protected]

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